x

Abu Dhabi, UAEThursday 20 September 2018

Billionaire Carlos Slim cashes in on 'failing' New York Times

In our latest round-up on the world's wealthy, Slim's fortunes soar despite Trump's swipe at his newspaper and a painting belonging to a former casino mogul's painting takes a hit

Mexican tycoon Carlos Slim bailed out out the newspaper in the wake of the financial crisis when it was in danger of failing. Pedro Pardo / AFP
Mexican tycoon Carlos Slim bailed out out the newspaper in the wake of the financial crisis when it was in danger of failing. Pedro Pardo / AFP

Carlos Slim

Carlos Slim is cashing in on his New York Times investment this year as the newspaper publisher’s stock surged despite President Donald Trump’s claims that it’s "failing."

Shares of the company more than doubled since Mr Trump’s November 2016 election, which has been a boon for the Mexican billionaire. Mr Slim bailed out the Times with a $250 million loan in the wake of the financial crisis, when it actually was in danger of failing.

Mr Slim, 78, began mapping out plans to unwind some of his holding in December and his Inversora Carso kicked off share sales worth about $150m in February, filings show. An analysis of Mr Slim’s stock holdings, past transactions, earnings from the high-interest loan and dividends show his investment returned at least 75 per cent, or a pretax gain of more than $300m.

Mr Slim, the world’s seventh-richest man, initially invested $127m for a 6 pe cent stake in the Times in 2008 and then loaned it $250m as the shares approached a 26-year low in early 2009. That deal gave him warrants that he exercised in 2015, buying 7.95 million shares for a deeply discounted $6.36 apiece.

The businessman is known for his savvy in buying assets at depressed prices. Arturo Elias Ayub, his son-in-law and spokesman, said the time was right to lock in gains. Is it failing?

"Lol," he said in an email. "Not at all. We still think it’s a great company."

The Times’ subscription revenue surpassed $1 billion in 2017. Both the publisher and Mr Slim have said he’s never tried to influence the paper’s editorial content, which has been tough in its Trump-focused coverage.

"We are grateful for Mr Slim’s confidence and support of the company," a Times spokeswoman said in an email.

After the election, Slim dined with Trump at the president’s Mar-a-Lago resort. Neither disclosed what they discussed, but Trump, whose fortune is about 1/20th the size of Slim’s, said at the time that he had “a lovely dinner with a wonderful man.” Mr Slim is worth $57.8 billion, according to the Bloomberg Billionaires Index, a ranking of the world’s 500 richest people.

 French businessman Serge Dassault died last month at the age of 93. The head of aviation and software giant Dassault Group, which owns Le Figaro newspaper, Dassault was a titan of the French business world. Thomas Samson / AFP 
 French businessman Serge Dassault died last month at the age of 93. The head of aviation and software giant Dassault Group, which owns Le Figaro newspaper, Dassault was a titan of the French business world. Thomas Samson / AFP 

Serge Dassault

Serge Dassault, the billionaire French businessman who died last month, owed his considerable political clout to his family’s stake in Dassault Aviation, the maker of France’s Rafale and Mirage fighter jets. Owning Le Figaro newspaper cemented his influence.

The chief source of his $27bn fortune was less glamorous, though: A 41 per cent stake in Dassault Systemes, which sells 3D design, simulation and industrial data management software.

Compared to fighter jets, this so-called product lifecycle management (PLM) software may sound a little dull. But customers include Tesla, Jeff Bezos’s rocketship company Blue Origin and flying car startup Joby Aviation. Its returns have been anything but drab.

Dassault Systemes’ shares have more than doubled over five years, valuing it at €29.9bn ($34.4bn). Among listed European software vendors, only SAP is worth more, according to Bloomberg data. Amadeus IT Group, another European tech giant that operates under the radar, is not far behind.

That performance explains why the 93-year-old Dassault was ranked at 28th on the Bloomberg Billionaires Index when he died.

Had Dassault Systemes’ shares been owned more widely, it probably would have been snapped up by a wealthy US or Asian suitor – a fate that’s befallen quite a few promising European tech companies, including robot maker Kuka and chip designer Arm Holdings.

But the Dassault family's anchor shareholding has given the business breathing space, which it seems to be using well. New license sales expanded by 11 per cent last year, pretty decent for a company that was spun out of Dassault Aviation more than three decades ago. The operating margin on a non-IFRS basis swelled to 32 per cent.

A highlight was persuading Boeing to use the company’s 3DExperience software to help modernise its production systems. It didn't disclose a value, but Le Figaro said the Boeing deal was worth $1bn.

With the stock trading on 38 times forward earnings, the non-family shareholders are pricing in a lot more going right. Perhaps too much given the fierce competition from Siemens, Autodesk and PTC. The shares are 6 per cent ahead of the average 12-month price target compiled by Bloomberg from analysts who follow the stock.

Still, it’s reassuring that 70 per cent of software sales are recurring and that the customer base is becoming more diverse. Dassault Systemes has been adding customers in life sciences, architecture and consumer goods. Plus there’s 1.5 billion euros of net cash, providing firepower for acquisitions and R&D.

Indeed, if fighter planes were the cornerstone of the Dassault family’s influence during the last century, 3D software will probably take its place in this one. Silicon Valley and China are building the future, but they're using French tools.

In January, casino mogul Steve Wynn resigned as finance chairman of the Republican National Committee amid allegations of sexual harassment and assault. Mike Clarke / AFP  
In January, casino mogul Steve Wynn resigned as finance chairman of the Republican National Committee amid allegations of sexual harassment and assault. Mike Clarke / AFP  

Steve Wynn

Steve Wynn had a lot riding on the three paintings consigned to Christie’s for sale last month, including his plan to start a new career as an art dealer.

Estimated at as much as $135m, the works were destined to be star lots at the modern and contemporary art sales in New York this week, marketed to his fellow billionaires alongside the collection of Peggy and David Rockefeller.

Then one of them, a self-portrait by Pablo Picasso titled Le Marin, was accidentally damaged late last week and withdrawn from the May 15 auction of Impressionist and modern art.

A paint roller attached to an extension pole used by a contractor was leaning against a wall before gravity took over and it fell, puncturing the lower right of the canvas, said a person familiar with the matter, who asked not to be identified. It’s unclear whether the painting was hanging on the wall at the time or if the pole struck the front or the back of the canvas, the person said.

Christie’s declined to comment on the details of the accident, saying only that it occurred “during the final stages of preparation.”

Another Picasso, a portrait of a woman with a cat, Femme au chat assise dans un fauteuil, was pulled as the two were covered by the same third-party guarantee. The third painting, Andy Warhol’s rendering of Elvis Presley estimated at $30m, still went on auction.

The sale was going to launch Mr Wynn’s career as an art dealer through his new online gallery, Sierra Fine Art, set up after sexual-misconduct allegations that he denies forced him to step down as chairman and chief executive of Wynn Resorts.

“He’s angry about it,” Wynn’s attorney, Michael Kosnitzky, said of the goring, calling it “gross, flagrant negligence".

All three paintings are displayed prominently on Sierra Fine Art’s website, along with other works such as Warhol’s “Superman” and a reclining nude by Henri Matisse. The gallery was conceived as an online-only space, said Mr Kosnitzky, a partner in the private client practice at Pillsbury Winthrop Shaw Pittman.

David Rubenstein, is the chief executive of the Carlyle Group. Saul Loeb / AFP 
David Rubenstein, is the chief executive of the Carlyle Group. Saul Loeb / AFP 

David Rubenstein

David Rubenstein’s love of historical documents runs deep. The billionaire co-founder of Carlyle Group owns a copy of the Magna Carta from 1297, a rare facsimile of the Declaration of Independence and an Emancipation Proclamation signed by Abraham Lincoln.

When it came time for Mr Rubenstein, 68, to name his family office, he dubbed it Declaration Capital. He created the firm last year as he stepped back from his role as co-chief executive of Carlyle and became co-executive chairman.

The former White House staffer who became a leveraged-buyout legend will directly oversee Declaration Capital. He’s also funded an affiliate called Declaration Partners, which has wider ambitions.

He recruited Brian Frank, a former money manager at Michael Dell’s MSD Partners, to run the unit targeting venture, growth and family-owned businesses, areas that wouldn’t directly overlap with Carlyle, said a person with knowledge of the matter, who asked not to be identified. The firm may ultimately seek outside capital beyond Mr Rubenstein’s fortune.

The staff includes Rubenstein’s daughter, Alexa Rachlin, who did a four-year stint in private wealth management at Goldman Sachs Group and was an investment director at Cambridge Associates, according to her LinkedIn profile.

Mr Rubenstein declined to comment through a Carlyle spokesman, and Mr Frank did not reply to a message seeking comment.

Family offices are increasingly common for the ultra-wealthy to manage their fortunes and take care of their personal needs. Mr Rubenstein, who’s worth $2.8bn, according to the Bloomberg Billionaires Index, is one of the most active philanthropists in the US. and hosts a Bloomberg Television show interviewing world leaders and business titans.

Family offices can present challenges for private equity and other investment professionals. They “need to be sensitive to potential conflicts of interest,” said R. Scott Beach, head of the family office practice at law firm Day Pitney. “They should invest in strategies, assets or sectors that they don’t follow in their funds.”

To avoid any potential conflicts of interest, Declaration will have to get approval from Carlyle on transactions. Declaration has completed about 10 deals, a person with knowledge of the matter said. In April, it took part in a $5m funding round for Workfusion, a company that develops intelligent automation software.

Mr Rubenstein founded Carlyle in 1987 with Bill Conway and Dan D’Aniello, and the trio initially backed the venture with $5,. They built the Washington-based company into one of the world’s largest managers of alternative assets - a pioneer in leveraged buyouts that’s expanded globally into credit, real estate, energy and infrastructure investments.

One of its most successful investments was a buyout of DuPont.=’s auto-paint business in 2013. Carlyle made $4.5bn, its second-biggest profit ever on the deal, and an annualised return of 80 per cent.

RELATED ARTICLES
Recommended